Sun buys CenterRun (which is where I work these days)

Joseph S. Barrera III joebar at
Wed Jul 30 12:44:53 PDT 2003

Sun revs up N1 with $66 million buyout
By Stephen Shankland
Staff Writer, CNET
July 30, 2003, 10:26 AM PT

Sun Microsystems has agreed to acquire start-up CenterRun as part of its
N1 plan to make it easier for customers to run complex collections of
computer equipment, CNET has learned.

The deal is valued at an estimated $66 million in cash and is expected
to close in August, sources familiar with the plan said. CenterRun's
software will bolster Sun's N1 plan to unite groups of computing,
storage and networking equipment into a single resource that's easy to
manage, efficiently used and quickly adjustable to changing needs, Sun said.

Sun has signed a definitive agreement to acquire CenterRun, said Yael
Zheng, senior director of N1 marketing. She declined to comment on
specifics, but said the company expected to close the deal as soon as
final details are ironed out. CenterRun didn't respond to requests for

CenterRun sells "provisioning" software, an emerging technology used to
let administrators--and eventually, automated management systems--send
software from a central administration system to a company's computers.
While Sun already sells software that lets administrators handle some
basic provisioning, CenterRun's technology is geared to controlling
higher-level software, such as that for running Java applications,
databases and Web sites.

"I think this will fit nicely in the services provisioning and
application provisioning area," Zheng said of CenterRun's software.

Part of Sun's direction for N1 has been to replace ad-hoc administrative
procedures--such as making sure a particular software package is
installed before loading another--with an automated process. CenterRun's
technology can do just that sort of thing, with a central engine called
the master server running tasks that previously had been recorded as
manually written lists of instructions called scripts.

CenterRun's server software can record, compare and change the
configuration details of server software from Oracle, Sun, Microsoft,
Apache, BEA and IBM, the company says.

"Configuration management is an absolutely critical component of any
next-generation systems management framework," said RedMonk analyst
James Governor, who predicted Sun and its competitors all will be
jockeying for position in the area in coming months.

Sun argues innovative technology will keep it ahead of the pack, but its
core initiatives depend partly on acquisitions. For N1, Sun acquired
Pirus Networks in September for $167 million in stock. It then bought
TerraSpring in November, for $30 million in cash.

"Sun seems to be moving toward buying much of their N1 infrastructure.
They seem to be putting themselves into a role that's more of an
integrator than creator of all the individual components," said
Illuminata analyst Gordon Haff.

Sun now argues acquisitions are an economically smart strategy.

"You're going to see a lot of interesting little technology
acquisitions," said Sun Chief Executive Scott McNealy last fall,
regarding the company's plans to build N1. "It's much more interesting
now compared to two years ago. You can actually get something of value."

The acquisition of CenterRun should help Sun expand N1 beyond
"virtualization," another crucial technology that makes it easier to
move software between different computing devices, said Summit
Strategies analyst Tom Kucharvy.

"It sounds like a good move and a reasonable price," Kucharvy said.
"They certainly had built up some of their virtualization capability
with their first two applications in this area, and provisioning is
really the next step."

Sun's rivals have relied on acquisitions as well. IBM acquired
ThinkDynamics in May for its plan, while Veritas expanded its management
software plans with acquisitions in 2002 of Precise Software Solutions
and Jareva.

Provisioning is one of the foundations not just of N1, but also of
competing utility computing initiatives such as IBM's on-demand
computing and Hewlett-Packard's Utility Data Center and Adaptive
Enterprise. With provisioning, a company experiencing a heavy load on
one type of server--a loan company on a day when interest rates drop,
for example--can set up new servers to accommodate the traffic.

Eventually, the vision is to automate this process, so new servers will
be fired up or shut down according not just according to demand but
according to "service level agreements" (SLAs)--a contract under which a
server user can pay a certain fee and be assured of certain performance.

The move seems to dovetail well with Sun's existing software,
Illuminata's Haff said.

"It looks like it fits in with where Sun's going," he said. "It would
seem, conceptually, that Terraspring is the base provisioning platform
and that this would fit at the higher level," provisioning applications
and meeting service requirements.

CenterRun's product, first released in 2002, initially was able to
control only servers running Sun's Solaris operating system but has
expanded to include IBM's AIX, Linux and Microsoft Windows.

Sun has a software product called Change Manager that can be used for
some provisioning tasks. However, it only works with Solaris servers at
present, according to RedMonk's Governor. In addition, Haff said it's
best only for the more limited task of installing a standardized,
prepackaged set of software.

Prominent CenterRun customers include VeriSign, Kaiser Permanente and

CenterRun is not alone in making this kind of provisioning technology,
Governor said. Aduva is a competitor and has a partnership with
management software stalwart BMC. Hewlett-Packard has an agreement to
use software from Altiris. In addition, IBM researchers are working on
the technology, Governor said.

CenterRun, based in Redwood City, Calif., was founded in 2000 by CEO
Aaref Hilaly, Basil Hashem (senior director of product management) and
Michael Schroepfer (chief software architect). Sequoia Capital and
Lighthouse Capital Partners participated in an $11 million investment in
the company in February 2002, and Sequoia was joined by Crosslink
Capital and Needham Capital Partners in a $12 million second round of
funding in June 2002.

One CenterRun board member is Sequoia's Michael Moritz, a Silicon Valley
powerbroker who invested in companies including Yahoo, Google and

CenterRun has a professional services staff, who can help customers
convert their manually written scripts into actions the CenterRun
software can automate.

Professional services will help Sun compete, Haff said. The company lags
IBM in that area and probably HP as well, but the company has been
trying to expand.

"Sun has had this focus on 'We really like to do everything with
technology.' That's a great tagline and a great goal to strive for. If
one company does something by throwing people at it, and the other
company can do it with cleverly engineered products, the second company
is going to be a lot cheaper," Haff said. "The problem is, when you're
talking about the early days of product capability, the reality is you
need a lot of services."

Sun now faces the challenge not just of integrating CenterRun's
technology, but also of making a persuasive case for N1, Kucharvy said.
IBM and HP both focused on technology as selling point when they
launched their own utility rivals to N1, but switched to highlighting
business advantages such as flexibility.

"When you really look at a company's dynamic computing strategy, the
technology execution is really only one small component of what is going
to be required to succeed," Kucharvy said. "You've got to have the
business case and show how it's going to address business goals as well."

    * Related News IBM thinks ahead with acquisition  May 14, 2003

    * Sun balances acquisition, innovation  February 26, 2003

    * Sun seeks self-reliance with new gear  February 9, 2003

    * Sun springs for software maker  November 15, 2002

    * Sun touts savings via "N1" project  September 19, 2002

    * Get this story's "Big Picture"

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